Provinces surpass centre in capital budget execution

Kathmandu, Feb. 12

Provinces have mobilised more development budget in the first half of the current fiscal year 2020/21 than the federal government.

While the capital expenditure of the federal government was 14.4 per cent by the end of the first six months of the current fiscal year (13 January), Province 1, Gandaki and Lumbini have spent greater budget than that.

Province 1 has spent 22.14 per cent of its development budget, Gandaki 16.55 per cent and Lumbini 19.02 per cent.

According to the mid-term review of the budget of this year, the average capital expenditure of the provinces is 14.11. They have allocated Rs. 139 billion in total for development works.

However, Karnali and Province 2 have performed the worst in terms of both the capital and recurrent expenditure. Karnali could mobilise only 5.87 per cent of its development budget while Province 2 achieved 9.01 per cent progress.

In terms of the total budget implementation, Lumbini has performed better than the others with 22.80 per cent, while Province 1 has 18.68 per cent progress and Bagmati has 15.03 per cent.

Budget mobilisation of the provinces (Rs. in millions)

Province	Budget	Capital Budget	Capital Exp. %	Total Exp. %
Province 1	40899	21925	22.14	18.68
Privince 2	33561	17978	9.01	9.58
Bagmati	51427	24149	13,48	15.03
Gandaki	34842	19999	16.55	15.13
Lumbini	36352	18620	19.02	22.80
Karnali	33741	19069	5.87	8.39
Sudurpaschim	33381	16758	11.85	12.82

Source: Mid-term review of Budget 2020/21

The federal government has allocated Rs. 99.8 billion for provinces.

Of that amount, Province 1 received the highest amount Rs. 15.1 billion and spent the highest among the provinces Rs. 2.46 billion. Lumbini spent Rs. 2.35 billion from the federal grants. Karnali and Province 2 spent only Rs. 545 million and Rs. 886 million respectively.

Likewise, the federal government has allocated Rs. 262.7 billion for the local governments across the countries as per fiscal equalisation, conditional, special and matching grants.

The budget review report has mentioned that the provinces and local bodies have very poor budget execution capacity. Some have even gone to the extent of mobilising internal loans.

Finance Minister Bishnu Prasad Paudel said that to make the fiscal federalism more effective, participatory budget management should be promoted among all levels of government along with the promotion of fiscal discipline and accountability.

The review has noted that there was need to make further reforms in terms of effective implementation of the development projects, fiscal discipline and assurance of accountability.

It also said that budget was not prioritiesed as per their jurisdiction, need and resources available. Many provinces and local bodies just followed the budget making modality of the federal government.

Likewise, the review pointed to the need for research and development to establish a long-term system for fiscal federalism and fiscal distribution among the governments.

Published in The Rising Nepal daily on 13 February 2021.